Commentary and analysis to persuade people to become socialist and to act for themselves, organizing democratically and without leaders, to bring about a world of common ownership and free access. We are solely concerned with building a movement of socialists for socialism. We are not reformists with a programme of policies to patch up capitalism.

Friday, April 03, 2015

Stock exchanges cannot feed Africa

Another blog-post following
on from the Geldof claim that more capitalism offers Africa hope.

The Ethiopia Commodity Exchange was started in 2008 with the
help of foreign donors to improve food distribution in a country where millions
often went hungry. By government decree, almost all buying and selling of
coffee, sesame seeds, and navy beans for export must take place on the
exchange. The government ordered export coffee trading onto the exchange shortly
after it opened, hoping it would jump-start activity and help attract other
business. That didn’t work: Small amounts of corn and wheat are traded, but
coffee and sesame seeds account for about 90 percent of exchange volume. The
ECX , which got funding from the U.S. and the United Nations among others, is
one of at least eight commodity exchanges started in sub-Saharan Africa over
the past two decades with the aim of improving food security for local
populations. Many have failed, and only South Africa’s is thriving without
government support.

Exchanges are a distraction from other initiatives that
would better serve poor farmers, says Nicholas Sitko, a Michigan State
University agricultural economist who’s based in Zambia, where a commodity
exchange closed in 2012. “We’ve learned that no amount of money pumped into
them and no amount of government effort to get them off the ground can force
them to work,” he says.

According to Fekade Mamo, general manager of Mochaland
Import and Export and a former ECX board member. “The objective was to bring
about an equitable food supply system” in the country, Fekade says,“That has
completely failed.”

Trading floors have flopped in Zambia, Uganda, Nigeria,
Zimbabwe, and Kenya. Each one, analysts say, suffered from the same flaw: a
top-down approach that’s better at attracting foreign aid than at improving
farming practices and developing transportation and communications networks.
Donors like exchanges because they look like institutions in their own
countries, says Peter Robbins, a former commodities trader in London who’s
studied African exchanges. And “African leaders like to show off trading floors
to show how modern their countries have become,” he says.

“Every country does not need an exchange. Nor is it any good
to establish them in places where they will fail.” says Shahidur Rashid, a
food-security analyst with the International Food Policy Research Institute in
Washington.